Bitcoin GROSSLY MISPRICED: Huge Price Swings COMING!
One Bitcoin could have been purchased for less than a penny when it first arrived on the scene. In fact, even in mid-2010, it was $0.008.
One unfortunate gentleman bought two Papa John’s pizzas for 10,000 BTC. By December 2017, Bitcoin’s price would reach nearly $20,000, only to deflate back down to $6,603 in April 2018.
The process of Bitcoin’s price discovery (along with other cryptocurrencies, which all tend to follow the price of BTC) is still ongoing as Bitcoin struggles to find its footing in the closing months of 2018:
Many, who bought Bitcoin in the five-figure range, are coming to grips with the importance of the No.1 rule of investing, not to lose money.
BTC has, thus far, been severely mispriced – it always was, from the very beginning.
There was no precedent for pricing initial coin offerings back in 2009, and a misunderstanding of Bitcoin’s true worth caused it to be grossly undervalued at the time.
In its genesis, Bitcoin was a pet project between cryptographers – a result of a concept first introduced in a 2009 white paper by the mysterious Satoshi Nakamoto. The idea was to devise a version of electronic currency that would allow online payments to be made from one person to another without any meddling from financial institutions or other third parties.
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Unlike a stock’s initial public offering, in which investors can use the company’s profitability/asset/future prospects to gauge its value and thereby create fair pricing for the stock, Bitcoin had no such price discovery mechanism. Thus, at first, they underpriced it – BTC should have been much, much higher in dollar terms, at the get-go.
Believe me, if a corporation had come up with the idea of Bitcoin, they would have ensured that the first transaction was at least $1,000. Viewed in that light, BTC is actually CHEAP!
Even when it was in the five-figure range, Bitcoin was trading for a very reasonable price.
Most of 2017’s Bitcoin investors are envious of people who got in during the early stages – but that’s like being jealous of the people who got free land when the pilgrims came to America; it’s the wrong way to look at it. Just as free land for the first settlers was a historical anomaly, so was BTC at $0.01, and as investors, we have to work with the market conditions that we’ve got today.
The correct way to view Bitcoin is as a limited-supply, inflation-proof currency. There will only ever be 21 million Bitcoins, and 17 million of them have been mined.
As for the outlook going forward, we have to keep in mind that sentiment will determine the near-term price, but true value will be the basis of Bitcoin’s price in the long term. Therefore, with all of the negative coverage that Bitcoin is getting in the mainstream media, BTC’s downside is probably 20%, or about $2,800.
However, that’s just the pessimistic short-term view. For patient investors, the upside is a return to five figures for Bitcoin. Severe mispricing, to the upside or to the downside, doesn’t last long – and should be capitalized on by smart investors.
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This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought.Please read our full disclaimer at PureBlockchainWealth.com/